Experience in Patent Litigation in the New Member States Dr. Lukas Pfister Merck Sharp & Dohme...
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Experience in Patent Litigation in the New Member States
Dr. Lukas PfisterMerck Sharp & Dohme
Budapest, September 10th, 2005
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“.. if we succeed in developing the potential of our citizens by fostering a creative spirit of adventure, individuals and nations will become rich, even if they are without much capital, labor or natural resources”.
Kim Dae-jung Former President of the Republic of Korea
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Outline
The core of IP protection is enforcement Europe‘s competitors Harmonization and Fragmentation in Europe Enforcement Experience in Central and Eastern
Europe Actors in Cooperation Promotion, accessibility and commericialization
of IP protection
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Without enforcement - no intellectual property
Directive 2004/48/EC:
„... without effective means of enforcing intellectual property rights, innovation and creativity are discouraged and investment diminished.“
Without property: no value created, no investment, no venture capital, no trade
Enforcement authorities play a key role
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Economic Development:The Human Factor Counts Most
Human Capital is the single most important factor for economic growth:
Source: World Bank study quoted by Hanzek, M. (ed.) Human Development Report Slovenia 1999, Institute of Macroeconomic Analysis and Development/UNDP
16%
20%
64%Human Capital
Physical Capital: 16%
Natural Resources: 20%
64%
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Economic contribution if IP enforced
scientific research scattered across territories, institutions
economic value numerous ways to commercialize inventions
fund raising from venture capitalist to expand research royalties from licensees milestone payments from partners in joint research trade of inventions investment in neglected inventions
creates jobs, creates business for suppliers, generates income to individuals and tresury
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International Patent Applications by Origin
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
EPC States USA Japan Germany Rep. of Korea China All others
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Global Research & Development
80% confined to US, Japan and Europe EU is currently losing R&D investment to
other countries changing in favor to China, India & Brazil EU: 7th Framework Program for Research &
Technological Development to attract R&D investment
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Competing with the U.S.
EU Strengths great diversity of
societies and cultures well-educated workforce lower employment costs
for researchers leading-edge technology
capabilities world class universities
and research institutes
US Strengths better in commercializing
its basic research early adoption of new
technologies more fluid supply of
venture capital long tradition and culture
of collaboration between universities and business
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Competing with Japan:
2002 IP Policy Outline: “Nation built on Intellectual Property”
Growing concern over decline in industrial competitiveness Creation Strategy Protection Strategy Exploitation Strategy Enhancement of Human Foundation to support strategies
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Competing with Innovative Singapore
Strategy to attract foreign R&D activities: Agency of Science, Technology & Research
to put in place policies, resources and research and education architecture to build indigenous biomedical science R&D competencies
More than $500 million invested in new research centers with another $1 billion in funding committed through 2006
Economic Development Board promotes investment in early stage dedicated to
biotechnology firms
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Singapore: Growth of Pharmaceutical Products Manufacturing
Year Output $mm
No. workers
Value Added $mm
Fixed Asset $mm
Val.Add/ Labor $’000
Val.Add/ Output %
Capital/
Labor $’000
1990 1,020.8 1,664 809.1 Na 486.2 79.3 Na
1995 1,339.0 1,855 1,083.5 583.7 584.1 80.9 314.66
2000 4,839.1 1,928 2,998.4 858.6 1,555.2 62.0 445.31
2001 5,134.2 2,375 2,796.8 2,085.3 1,177.6 54.5 878.01
Average Per Annum Growth Rate (%)
1990-2001 15.8 3.3 11.9 23.61 8.4 18.71
Percentage of Total Manufacturing
1990 1.4 0.5 3.7 Na
2001 3.7 0.7 8.8 4.3
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Patent Fragmentation in the Community
National patents EPO patents, but no Community Patent elements of harmonization
Supplementary Protection Certificates Pediatric Indications
National court systems Mostly national procedural rules
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IP Harmonization in the Community
Harmonization of enforcement TRIPS – member states and Community bound
Art. 41 – effective enforcement Art. 34 – reversal of the burden of proof Art. 50 – preliminary injunctions
Directive 2004/48/EC On the Enforcement of IPR Council Regulations 1383/2003 and 1891/2004 on
customs measures against goods suspected of infringing certain intellectual property rights counterfeits
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Legislative experience: Lowest Common Denominator
Association Agreements: IP protection level similar to the one in the EU by 1997-99
Reality Selective interpretation of “similar level” of IP protection Bolar provision in most CEE patent laws Late introduction of SPC Regulatory data protection: six years and linked to patent TRIPS 39.3 not recognized as mandating regulatory data
protection
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Enforcement experience in CEE – institutional weakness
Lack of courts or court units specialized in IP underdeveloped IP capacity in the courts little technical expertise allocated to the courts / scarcity
of expert witness Independence of courts?
refusal to accept foreign experts where most nationals can be linked to one party
low salaries low respect for judiciary young tradition of spirit of court independence from
administration
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Enforcement experience in CEE – institutional weakness
Impartiality of courts?
Nullity counterclaim against later process patent of defendant not dealt with by court
Lack of effective deterrents against infringement
Insufficient publications of judgments and their motivation
Medicines: administered prices of patented products undermine market value of patents
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Enforcement experience in CEE – weak enforcement practice
Reversal of the Burden of Proof denial on the grounds of “competition of patents” theory
Preliminary Injunctions difficult to obtain difficult to obtain – particularly for preventing infringement official information difficult to obtain before launch of infringing
goods taking defendant‘s interest into account beyond TRIPS 50 showing of irreparable harm even where not ex parte prohibitive amounts of bonds – particularly for SMEs how to enforce preliminary injunctions? – Court bailiffs?
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Enforcement experience in CEE – weak enforcement practice
Statute of limitations reducing enforcement possibilities
3 years from first infringement of which aware 3 months for filing for an injunction
Appeals inadequate deadline of as little as 8 days from judgment
Extraordinarily slow proceedings unlimited possibilities to make submissions no resolution until patent expiration
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Why Reluctance to IP Protection in CEE?
Tradition of weak protection of property in CEE good business with lack of IP
Resistance to change survival of pre-existing alliances distortion caused by conflict of interest not eliminated
IP not perceived as opportunity lack of positive experience with IP
Tradition of low economic freedom low tradition of rewarding based on merits low tradition of valuing human capital
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Directive 2004/48 on the enforcement of intellectual property rights Contents:
1. Scope (Art 2)2. General obligation (Art 3)3. Entitlement (Art 4)4. Presumption of authorship & ownership (Art 5)5. Evidence (Art 6)6. Measures for preserving evidence (Art 7)7. Right of information (Art 8)8. Provisional and interlocutary measures (Art 9)9. Corrective measures (Art 10)10. Injunctions (Art 11)11. Alternative measures (Art 12)12. Damages (Art 1313. Legal Costs (Art 14)14. Publication of judicial decisions (Art 15)15. Sanctions by member states (Art 16)16. Codes of conduct (Art 17)17. Assessment (Art 18)18. Exchange of information and correspondence (Art 19)19. Implementation (Art 20)
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Enforcement Directive (2004/48/EC)
Codification of common EU15 standards
Art. 3 – enforcement measures
not unnecessarily complicated not unnecessarily costly no unreasonable time-limits or unwarranted delays effective, proportionate and dissuasive
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Enforcement Directive (2004/48/EC)
Art. 9 – interlocutory injunctions
to prevent any imminent infringement recurring penalties for continued infringement preventative seizure of goods suspected of infringing evidence = the judge‘s „sufficient degree of certainty“
that
applicant is the rightholder applicant‘s right is being infringed
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Counterfeit Statistics 2004
Source:http://europa.eu.int/comm/taxation_customs/customs/customs_controls/counterfeit_piracy/statistics/index_en.htm
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Counterfeits of Medicines
source: FDA
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The costs Europeans bear
Product piracy is responsible for 70.000 working places less each year Damage to the German economy alone: € 20 – 25 bn
each year € 500 bn yearly turnover in fakes (10% of world trade)
Role of Customs Authorities: fight against counterfeiting performing the best possible controls and goods help prevent consumption of unsafe products
Source: Wirtschafts Woche, Nr. 27, June 30.2005
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Council Regulation 1383/2003
Customs measures improve enforcement at border against
import, export, re-export of goods infringing certain IPR detention of products suspected of infringement Art. 11: simplified procedure under national law
good abandoned for destruction no need to determine infringement consent from right holder, at right-holder‘s expense
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New EU Members Have What It Takes
‘Remarkable scientific potential… especially in the CEEC is not properly mapped’ (2002 Study by ALLEA)
Most of the CEE countries have skill levels comparable to those of countries at the cutting edge of technological innovation (UN-Human Development Report 2001)
Sources: Report presented to the ALLEA General Assembly, March 13-15, 2002 (ALLEA: the Association of All European Academies); UN Human Development Report 2001, Annex 2.1
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Medals 2003 & 2004
www.brussels-eureka.be
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Medals 2004
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Effective IP Enforcement through Cooperation Effective IP enforcement requires
sophisticated interaction between actors Actors
cooperation between legal community, academia and scientists and creators
patent offices to promote IP and facilitate usage venture capitalist, investors and scientists, creators of IP courts, publication and discussion of reasoning enforcement authorities – prosecutors, police, customs
authorities
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European Patent Officewww.epo.org
Free access - available in all European languages Events, Seminars European Patent Documents Journal, Bulletin, Databases & News, Events PatLib (Patent Library) Network
301 centres in Europe patent info & related issues (trade marks, design) practical assistance annual events
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EU 7th RTD Framework Programme
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foster academic infrastructure for basic research ensure proper funding (3% of GDP) ensure maximum exchange of information
ensure that researchers seize IP opportunities legal and business advice - create “investable” property
capitalize on competitive research honor best proposals and promising projects
help attract venture capital make significant innovation in processes, products and
services understood and known help evaluate IP and negotiate investments
endorse harmonized IP protection levels unwaveringly
Turning brain into a competitive advantage
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Innovation will occur – but where?
Weak IP enforcement contributes to:
brain drain creation of innovation
elsewhere import of innovative
products delayed access to new
technology potential health risks
Strong IP enforcement contributes to:
attract creators of brain products
broad variety of inward investment
positive contribution to trade balance
early access to technology access to pioneers and
independence
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European Research and Competitiveness
“Curiosity and creativity are in our genes. These form the basis of research. And research is the key to change, to innovation.”
Janez Potočnik, European Commissioner for Science and Research